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HUD Assumes Control of Chicago Housing Authority : Takeover: Inability to improve management, poor program oversight and fraud are cited. Federal officials face task of transforming slums.

TIMES STAFF WRITER

Federal housing officials Wednesday took control of Chicago’s troubled public housing system, a move that signals the deepening chaos afflicting big city housing projects and tarnishes the vision of Vincent Lane, the activist city housing administrator whose dreams of transforming high-rise slums are now clouded by his resignation.

In the largest takeover of a big city housing system by the federal government, the board of the Chicago Housing Authority resigned en masse Tuesday night, replaced Wednesday morning by an emergency team of federal Housing and Urban Development officials from Washington.

HUD officials are taking the helm of a downward-spiraling agency that housing experts describe as the nation’s worst, plagued in recent years by a hidebound bureaucracy, poor planning, occasional corruption and a frayed housing stock depleted by years of waste and mismanagement.

The CHA operates more than 40,000 public housing units, many of them shoehorned into slum towers that loom over poor neighborhoods on the city’s South and West sides.

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“Chicago’s public housing has been a bottomless pit,” said Ed Marciniak, a professor at Loyola University’s Institute of Urban Studies. “Finally, everyone’s admitting it, which is a place to start.”

In a news conference announcing the details of the takeover, Housing Secretary Henry G. Cisneros said Joseph Shuldiner, his chief deputy for public housing, would oversee the federal effort. Shuldiner previously ran New York City’s Housing Authority and won praise for a later stint as head of the Los Angeles Housing Authority.

Unlike those cities, Shuldiner said in an interview Wednesday, Chicago “has problems that no individual housing authority can overcome by itself.” Shuttling over the last two days between internal meetings with officials and sessions with suspicious tenant leaders, Shuldiner said HUD’s most pressing tasks are taking the reins of the CHA, improving security in crime-racked units and accelerating repairs in buildings plagued by broken elevators, faulty pipes and vandalized fixtures.

Cisneros said that the decision to assume control of the CHA was the result of numerous factors and not a single “smoking gun.” After a series of internal reviews in recent months, Cisneros said, “it was time to focus on Chicago.”

But HUD officials and housing experts said the move was precipitated by growing evidence that the Chicago agency--which receives more than $350 million annually from the federal government--was simply out of control.

The evidence included the agency’s inability to improve overall management, growing reports of poor oversight and fraud in the CHA’s delivery of housing vouchers to poor tenants and Lane’s own recent drift away from the agency’s day-to-day operations toward private business interests.

On Wednesday, Lane, who ran the CHA for seven years, acknowledged that the job had become “a real burden to me.”

Lane, 53, has been touted as a housing visionary, a private developer who speaks for many experts seeking reforms for public housing. He led a growing movement of housing officials who believed high-rise projects could only be improved by shrinking their numbers and dispersing residents into the general population.

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He laid plans to turn the Cabrini-Green housing project, one of the most notorious in the nation, into a smaller complex that would attract working-class Chicagoans. A blunt-spoken man who grew up near a housing project, Lane called for “no-knock” police raids to end years of gang control of many public housing towers.

His public stock once was so high that he was considered a strong candidate for the job Cisneros eventually won. President Clinton once called Lane a “genuine hero,” and a year ago made a tour of the Robert Taylor homes here with Lane.

But in the past year, Lane’s tenure had grown difficult. Last summer, the agency was rocked by admissions that more than $37 million of its pension funds were missing--a loss being investigated by federal prosecutors.

At the same time, internal audits by HUD inspectors found a yawning backlog among applicants for Section 8 vouchers, a federal program designed to subsidize 70% of rent payments for former public housing tenants who move into private housing. Officials say they found a waiting list of more than 40,000 applicants for the program--and there were reports that inspectors found evidence that some mid-level CHA workers had taken bribes to move applicants up the list.

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The CHA’s administration of the voucher program was so haphazard, Shuldiner said Wednesday, that last year HUD turned over the agency’s yearly $100-million Section 8 appropriation to Cook County instead of giving it directly to the CHA.

“I’ve been told they don’t get payments to landlords on time, they don’t do housing inspections on time,” said Alex Polikoff, a lawyer who is executive director of Business and Professional People for the Public Interest. The organization administers a separate, widely praised Section 8 program imposed on the city by a federal judge.

Lane’s own star began to lose luster earlier this year after HUD lawyers began examining allegations of a conflict of interest stemming from private development investments Lane made with financial backing from the Nation of Islam. The Chicago Tribune tied the investments to a lucrative housing project security contract awarded by the CHA to a guard firm run by a ranking Nation of Islam leader.

The HUD takeover is only the latest federal move to right chaotic conditions at big city housing authorities. In the last two years, HUD has assumed control of agencies in Philadelphia, New Orleans and Washington, D.C.--actions that housing experts say have become politically acceptable under a Democratic Administration.

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A Ronald Reagan Administration effort to seize the CHA was spurned in the 1980s by the late Mayor Harold Washington. But current Mayor Richard M. Daley is more amenable, observers say, because the takeover was friendly. Daley will have a behind-the-scenes role, some experts suggested, while HUD will take the public heat for any unpopular moves.

Agency officials moved quickly in recent days to win the support of housing project residents, many embittered by decades of unfulfilled promises. Ethel Washington, a tenant leader who represents half of the residents of the Robert Taylor homes, a sprawling South Side complex, said she left a Tuesday night meeting with HUD officials “hopeful, but not giving my heart away.”

Washington said she would not be convinced until idled elevators are fixed, apartments are upgraded and gang members flushed out of high-rise hide-outs. For the moment, like many residents, she is unsure where the changes will leave them.

“It’s like a tornado,” she said. “All you can do is hope you’re around when it’s over to see whether you’re still alive.”

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